Toyota's latest Prius is big, smart, clean and good looking. Can it finally convert us to the benefits of Hybrid technology?

While lounging with a newspaper in a coffee shop recently, I was treated to a fascinating piece of buyer behaviour. Emerging from a big discount store, I noticed a man roll up the conspicuously branded carrier bag, sneak a peek to make sure nobody was looking and then pop it in a bag from a far more upmarket retailer. This is, in microcosm, the reason why the first generation of so-called hybrid cars failed in the UK. Nobody wants to be obviously branded a penny pincher. The latest Toyota Prius, however, has set about rectifying that hiccup.

When the original Prius and its Honda rival, the Insight, were first launched, many were impressed with their technology and green credentials. Using an electric motor to augment or temporarily replace a conventional petrol engine was a great idea. Unfortunately both cars were rather compromised, the Honda by its 'squeezed from a toothpaste tube' styling and impractical two-seater layout and the Toyota by its dull driving manners, cramped cabin and distinctly lacklustre lines.

Toyota's second generation Prius changed all that and gave the company leadership in this sector. It has recently been improved with changes to the styling of its headlamps and rear light clusters and a restyled front grille. Inside the cabin, comfort for passengers has been enhanced, with an adjustment to the hip point for those sitting in the back. Buyers will also find smarter upholstery colours, a soft-touch paint finish for the dashboard and the introduction of a leather-trimmed steering wheel across the range. Fresh options include full leather trim, new metallic paint finishes and, on T Spirit models, a rear parking monitor and Intelligent Parking Assist (IPA).

The current Prius mirrors the first generation model's technique of being able to run on its petrol engine and then switch to exclusively electric operation when conditions are favourable. Toyota's Hybrid Synergy Drive offers impressive emissions and strong fuel economy performance for a car that now competes in the Avensis-sized Mondeo sector. Sometimes the Prius' silent running takes a little getting used to, but under many high-density traffic situations, this car offers totally emissions-free motoring.

A more powerful 50-kilowatt motor that operates at higher voltages offers 50 per cent more electric power than the Mk1 Prius, while sleek aerodynamics and an efficient petrol engine mean the car will accelerate to 60mph in less than 11 seconds, peak power being rated at 113bhp. This is comparable with a number of leading diesel cars but fuel economy is far in excess of what even the most parsimonious medium range diesel can manage, the latest Prius bettering 56mpg in town. Carbon dioxide emissions are rated in the lowest possible banding and the Prius is even exempt from the London congestion charge.

Much the same could be said about its predecessor, but during its six-year life, Toyota only sold 110,000 worldwide - a number which represents an average UK annual sales figure for the Ford Focus. The Mk2 Prius is proving to be far more successful - to the point where for most of the model's UK sales life thus far, demand has far exceeded supply. Buyers have responded well to the sharky coupe-like styling and a neat front end. Yes, the wheels still look a little too small but the shape will no longer mark you down as some sort of bearded eco-warrior. With split folding rear seats and a hatchback it's even agreeably practical, the body boasting a drag coefficient of 0.26.

The Prius is the first car to feature a fully electronic 'brake by wire' system. Mercedes had dabbled with this set-up but Toyota offer a more sophisticated arrangement that allows for the brakes to recharge the battery packs under braking. Customers have been traditionally wary of these techniques, often ignoring the fact that their steering is probably electronically controlled. All credits to Toyota for sticking its neck out and offering a system that may some day find its way into all cars.

The innovation doesn't stop there. As well as a push-button ignition system, the Prius also features a by-wire gearshift system that dispenses with the traditional floor-mounted gear lever. Instead the Prius opts for a dashboard-mounted joystick that drivers tap back and forth to shuttle through the gears. It's easy to operate, it looks funky and it frees up a little more space inside the car. A novel electrically operated air conditioning system also debuted in this Prius. Unlike conventional set-ups that draw their power from the engine's fan belt, this system can provide an uninterrupted supply of chilled air, even when the petrol engine has shut down in favour of the electric motor.

You can see why this second generation Prius has proved so popular - big, nicely styled, better built and more fun to drive than its MK1 predecessor. It also sweetens the deal by being more economical, more practical and cleaner to boot. At prices running from 17,777, it's not cheap - but then, cutting edge technology never is. Still, the recent minor improvements should keep the order books ticking over while the opposition belatedly catch up. For the time being, this is still the benchmark if you're looking for a hybrid-powered car.